Safeguarded rights are created when a couple divorce and the ex-spouse is awarded a pension credit that contains contracted-out pension funds.

These pension funds arise when an individual or a pension scheme take the decision to contract out of the Government’s top up pension arrangement. This was formerly known as SERPS (State Earnings Related Pension Scheme) and is now known as the State 2^nd Pension (S2P)

Currently safeguarded rights cannot be taken before age 60 or used to provide a pension commencement lump sum. This was an unwelcome anomaly after the sweeping changes that came about under the Pension Simplification legislation allowed the other elements of pension benefits to be taken from age 50 and up to 25% of the fund could be taken as a Tax Free lump sum.

Under this Bill it is proposed that these restrictions will no longer apply.

The proposed date for this to come into force is October 2008, but this could still change and we will keep you updated as we know more.

Pension legislation seems to always be changing so please note that the minimum age of drawing pension benefits will rise from age 50 to 55 on the 6^th April 2010.  Meaning that consideration of the timing of taking benefits is important.